Earticle

초록

영어

Motivated by agency theory, we explore the effect of co-opted directors, i.e. directors appointed after the incumbent CEO assumes office, on corporate risk taking. Our results show that a higher proportion of co-opted directors on the board leads to significantly higher corporate risktaking, as reflected by the substantially higher volatility in stock returns and a higher standard deviation of 􀀷􀁒􀁅􀁌􀁑􀂶􀀃􀁔􀀑 The evidence is consistent with the notion that co-opted directors represent a weakened governance mechanism that allows managers to take more risk. Additional tests show that endogeneity is unlikely, including a fixed-effects analysis, an instrumental-variable analysis, propensity score matching, and an analysis where we exploit the Sarbanes-Oxley Act as an exogenous regulatory shock that raises board co-option. Crucially, our evidence shows that board co-option can explain the extent of corporate risk-taking much better than does board independence, which has been the dominant measure of board quality in the literature.

목차

Abstract
 I. Introduction
 II. Hypothesis Development
 III. Sample and Data Description
 IV. Results
 V. Concluding Remarks
 References
 Appendix

키워드

저자

• Pornsit Jiraporn [ School of Graduate Professional Studies Pennsylvania State University ]
• Young Sang Kim [ Haile/US Bank College of Business Northern Kentucky University ] Corresponding author
• Sang Mook Lee [ School of Graduate Professional Studies Pennsylvania State University ]

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• 간행물명

  한국재무학회 학술대회

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  2006~2024

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  KDC 325 DDC 330